What is Jason Fried and David Hansson’s entrepreneurship philosophy? What is the benefit of keeping a company small and lean?
In their book Rework, Jason Fried and David H. Hansson champion a simpler, cheaper, less labor-intensive way to manage any company. In brief, you don’t need an MBA, outside investors, strategic plans, or a board of directors to launch a business. You don’t even need an office. Instead, you need to reject old-school myths, embrace simplicity, and run your company like a smart, frugal, well-oiled machine.
The Rework philosophy is 6-fold.
Rework: Rethinking Entrepreneurship
In Rework, Jason Fried and David Heinemeier Hansson of 37signals, a company that creates online management tools, believe that anyone can start and operate a business with fewer resources than they think. Their entrepreneurship philosophy is six-fold:
Principle 1: Don’t Listen to Naysayers
The world is filled with pessimists who will tell you that your innovative business ideas and product concepts won’t work because people aren’t ready for something new. They’ll also say that the only way to do business successfully is to emulate the way it’s always been done. Don’t believe these naysayers. Other people’s failures are their failures, not yours. You’re traveling a different path.
Model for success: 37signals has broken dozens of traditional business rules and still succeeds. The authors have taken an untraditional path by employing fewer than 20 people who work from home from countries all over the world. They don’t spend money on advertising or salespeople. They’ve even revealed their success secrets to the world, and it hasn’t hurt them.
Principle 2: Failure Isn’t Your Teacher
We’ve all heard that nine out of 10 new businesses fail. Some people say that such failure serves a purpose—it teaches us to learn from our mistakes. In reality, mistakes don’t teach us anything useful. They show what our next step shouldn’t be—repeating the mistake again—but not what it should be.
A Harvard Business School study bears out this idea. It showed that people who succeeded with their first business were much more likely to succeed with a future business. On the other hand, when people who failed at their first business started a second one, they had no greater chance of success than people who had never run a business at all.
Mimic the theory of evolution: Build on adaptations that work, not ones that don’t. If something works for your business, keep doing it. Learn from success, not failure.
Principle 3: Don’t Rely on Strategic Guessing
CFOs and CEOs believe they need to create long-term plans for their business, but such plans are based on past performance, which by definition has little to do with future performance. Just because your business operated one way in the past doesn’t mean it will operate in the same way in the future. Every business is subject to constant flux that can’t be predicted: The market changes. The competition changes. Even customers change.
If you make company-wide decisions based on long-range plans—in other words, guesses— you’re engaging in fortune-telling. Worse, your strategic plan can become a straitjacket that doesn’t allow for improvisation as conditions change. You’ll miss out on key chances to change direction because you’re blindly following your original plan.
Yes, you should think about your company’s future, but don’t plan for it as if you can control it or accurately predict it. Instead, plan what you’ll do in the immediate future, like this week. Make future decisions as you observe the changing conditions around you.
Principle 4: Bigger Doesn’t Mean Better
People are impressed when you run a big business in a high-rise building with 100 employees, but they’re not nearly as impressed when you work out of your garage by yourself. However, company growth is highly overrated. Many owners of large businesses long for the days when their companies were smaller and easier to manage. They’re faced with headaches that small businesses don’t have, like crippling rent, sky-high employee benefit costs, and overwhelming IT infrastructure.
In terms of company growth, what matters is appropriate size—your business should grow to the right size for your particular business. Your three-person company may be far more profitable than someone else’s 300-person company.
Principle 5: Work Smart, Not Hard
Americans admire hard work. We’re wowed by people who devote their lives 24/7 to their jobs. (“Wow, you slept at the office. High fives for your dedication!”)
But hard workers who pull all-nighters actually create problems instead of solving them. Workaholics tend to be martyrs—they enjoy feeling like they’re the hardworking heroes who save the company from disaster. They make other employees feel like they’re not doing enough. And worst of all, they’re not that productive. Instead of trying to figure out a smart, efficient answer to a problem, they just throw more hours at it.
Hire the worker who figures out the fastest, most efficient ways to get things accomplished then goes home at 5 o’clock, not the worker who burns the midnight oil.
Principle 6: Entrepreneur Is Just a Fancy Word for “Starter”
The word “entrepreneur” is overused and misunderstood. Somewhere around the year 2000, “entrepreneur” came to mean a visionary leader who spouts brilliant business ideas (and probably drives a flashy Tesla). But an entrepreneur is actually just a person who starts and operates a business. If you own a nail salon, you’re an entrepreneur. If you’re a freelance writer, you’re an entrepreneur. If you invented the Tesla, you’re an entrepreneur.
If you’re starting a business, think of yourself as a “starter” rather than an entrepreneur. Entrepreneurship is within anyone’s reach, so stop using language that implies you have membership in an elite, geniuses-only club. Anyone with the gumption to start a business is a starter.
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Here's what you'll find in our full Rework summary:
- Why the old-school process of starting a business doesn't work anymore
- Why you should completely ignore your business competition
- How to hire employees and help them thrive